Pakistan’s foreign exchange reserves recovered to $21.5 billion as of October 9, 2026, while real gross domestic product (GDP) growth reached 3.7% during the fiscal year 2025-26, reflecting improvements in the country’s macroeconomic conditions, according to the State Bank of Pakistan (SBP). Governor Jameel Ahmad presented the latest economic developments during meetings with international investors, financial institutions and global economic partners on the sidelines of the International Monetary Fund (IMF) and World Bank Annual Meetings held in Bangkok, Thailand, from October 12 to 17, 2026. The discussions focused on Pakistan’s economic recovery, external financial position, policy reforms and prospects for sustainable growth amid continued uncertainty in the international economic environment.
The meetings brought together senior executives from major international financial institutions, including JPMorgan, Citibank, Jefferies, Deutsche Bank, Barclays, Bank of America, MSCI, Standard Chartered and Mitsubishi UFJ Financial Group. Governor Ahmad also held discussions with bilateral and multilateral development partners, representatives of other central banks and global credit rating agencies. During these engagements, he highlighted the role of prudent macroeconomic policies and structural reforms in strengthening Pakistan’s capacity to manage domestic and external economic pressures. According to the governor, the continuation of these measures has helped improve economic resilience over the past three years and contributed to a more stable outlook for the country’s financial position.
Pakistan’s economic growth has gradually recovered following a contraction in FY23, reaching 3.7% in FY26. The State Bank expects the economy to expand by between 3.5% and 4.5% in FY27, indicating the possibility of continued recovery if prevailing economic conditions remain supportive. Inflation has also declined substantially from the elevated levels recorded during FY23, moving close to the target range in FY26 despite a significant oil price shock. These developments point to improvements in price stability and economic activity, although the outlook remains dependent on domestic policy implementation, external market conditions and the management of potential economic shocks. The central bank has maintained that a consistent policy approach will remain important for consolidating the progress achieved so far.
The recovery in foreign exchange reserves was another central issue discussed by the governor during his meetings with investors. According to the State Bank, its official foreign exchange reserves increased from less than $3 billion in February 2023 to $21.5 billion by October 9, 2026. Over the same period, the central bank’s forward liabilities declined from more than $5.7 billion to less than $1 billion. These changes have strengthened the central bank’s external financial position and improved its capacity to manage foreign exchange requirements. The State Bank attributed much of the reserve accumulation to its purchases of foreign currency, supported by an almost balanced current account in FY26. The country’s external debt stock, meanwhile, increased only marginally over the preceding three years, according to the governor’s remarks.
Regulatory measures introduced by the State Bank have also contributed to improvements in the foreign exchange market. Reforms concerning exchange companies and efforts to channel workers’ remittances through formal financial channels have helped improve liquidity in the interbank foreign exchange market. Such measures are intended to strengthen the regulated foreign exchange system and support the availability of foreign currency through official channels. Looking ahead, the central bank expects to continue purchasing foreign exchange, while the current account deficit is projected to remain contained between 0% and 1% of GDP in FY27. Maintaining this position will be important for sustaining reserve growth and managing the country’s external financing requirements, particularly if international oil prices, import demand or global financial conditions create additional pressure.
Pakistan’s fiscal position has also shown improvement, with the primary fiscal balance recording a third consecutive annual surplus in FY26. A primary surplus occurs when government revenues exceed non-interest expenditure, providing an indication of the government’s ability to manage its finances before interest payments on public debt. The continued surplus has accompanied a downward trajectory in the public debt-to-GDP ratio. Sustaining this trend will depend on revenue mobilisation, expenditure management, debt servicing requirements and continued fiscal discipline. The governor presented these developments as part of the broader economic adjustment undertaken by Pakistan, with fiscal performance and external stability remaining important factors in discussions with international investors and credit rating agencies.
Governor Ahmad also informed international stakeholders that Pakistan had reached a staff-level agreement with the IMF on reviews under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). Continued implementation of the agreed reform agenda, he said, had supported investor confidence, contributed to upgrades in Pakistan’s sovereign credit ratings and facilitated access to international capital markets despite challenging global conditions. Progress under the IMF-supported programmes remains relevant to Pakistan’s financing outlook, policy commitments and engagement with international lenders. The staff-level agreement represents progress in the review process, although the announcement did not provide further details about the timing of subsequent approval or disbursements.
The governor acknowledged that geopolitical developments and external economic risks continue to pose challenges for Pakistan. However, he said the country was in a significantly stronger position to withstand external shocks than during previous periods of economic stress. The improvement in foreign exchange reserves, lower forward liabilities, easing inflation and consecutive primary fiscal surpluses were among the developments highlighted in support of this assessment. Jameel Ahmad reaffirmed the State Bank’s commitment to maintaining macroeconomic stability, strengthening external financial buffers and advancing structural reforms to support sustainable economic growth. Pakistan’s ability to preserve these gains will depend on continued policy consistency, effective implementation of reforms and the management of external risks as the economy moves into FY27.
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